Tata Motors intends to utilise Rs. 7,500 crores, which it plans to raise via a rights issue, to fund various activities, including introduction of more than 100 new commercial vehicles over the next three years and passenger vehicles on the new modular platform from FY 2016-17. It also intends to use the funds to expand international markets.
The country’s largest automobile company had registered consolidated revenues of Rs. 2,32,834 crores in 2013-14.
“The rights issue proceeds are expected to be utilised to finance a portion of the ongoing capital expenditure, including product development expenses; an investment in subsidiaries to support future growth opportunities in India and abroad,” the company said.
Elaborating on the new product development plans in the commercial vehicle (CV) space, the company disclosed that the major actions planned include “over 100 new products/variants for domestic and international markets over the next three years, launch of the Ultra range of trucks and broadening the Prima portfolio for market competitiveness.”
Besides, the company is looking to develop a product portfolio in the passenger vehicles segment until 2020, with the introduction of two or three new products each year.
The other initiatives planned include eight improved and enhanced vehicles across five key brands over the next two or three years and “the products offered on a new modular platform from FY 2016-17”.
Besides, the company is looking at expansion of commercial and passenger vehicle operations in Thailand, Indonesia and South Korea, as well as penetration of new export markets for India business, including Australia, the Philippines and Vietnam.
The company expects the total capital outlay required for future growth and expansion on a global basis would remain high in the near term, around Rs. 4,000 crores per annum for the Indian business and GBP 3.5-3.7 billion per annum for the JLR business.
Elaborating on the reasons to come up with the rights issue, Tata Motors said: “… talking into account the cyclical nature of the automobile operations, as evidenced by the downturn in India and the negative impact on operating cash flow, and the future capex and product development programme, it is considered prudent at this stage for the company to raise funds through a rights issue,” it said.
Besides, the company is working on various alternate technologies like hybrids and fuel cell as it prepares itself to cater to the needs of emerging passenger vehicle segments. “Yes, we are looking at introducing the AMT (automated manual transmission) technology in the future models. We have already showcased Nano AMT at Auto Expo. By 2020 we expect 50 per cent of our product portfolio to have the AMT technology,” said Dr. Tim Leverton, Tata Motors President and Head-Advanced and Product Engineering.
Elaborating the benefits of the AMT technology, he said: “It is fuel efficient and is a good fit for the customer demand here.” The company sources the technology from Magneti Marelli of Italy.
Asked about other technology advancement plans, Dr. Leverton said the company is working on introducing buses with hybrid technology in the country in the next three-five years. “We have already sold buses in Europe with hybrid technology. As electric vehicles are still long way off due to the costly batteries, the hybrid technology is the closest we are in terms of launching here in the next 3-5 years.”
He further said the company is also working on fuel cell technology. “The other aspects include light weighting and downsizing the new generation of engines. Revotron gasoline engine has been appreciated and there will be more from the family to suit various vehicle sizes.”
Tata Motors which is focusing on regaining its market share in the domestic auto industry has worked on its future strategy and is also taking the help of Jaguar Land Rover in order to improve fit and finish of its passenger vehicles.
– PTI Economic Service